How does a carrier determine the rates for my group?

Rates are first based on the plan of benefits selected. Age, geography and family status are the only factors used in determining the premium for each group. Gender is no longer a factor under ACA. Carriers use modified community rates for small employer plans. Rates are not based upon the actual or expected claims history of any particular person or persons in the small employer group. In addition, carriers do not rate based on gender and there is no special rate for smokers versus non-smokers. Prior to 2014 carriers rated policies based on the average of all their employees and dependents. This is known as a composite rate. Starting in 2014, carriers were required to use separate rates for each employee and their dependents. This is known as age rating. Carriers now use a child rate for ages 0 through 20. This is incrementally increasing every year from age 21 through 64. Age 64 and over remains the same. Medicare carve out rates have been eliminated. Each carrier must set its rates so that its highest rate is not more than 2 times its lowest adult rate for a specific individual plan. (This is referred to as a 2:1 rate band.)

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